Cast your mind forward to the first half of 2018, halfway through the Abbott government’s second term.

Tony Abbott
’s political honeymoon is long over, and the prime minister’s standing in the public opinion polls has declined as the public’s memory of its dissatisfaction with the Rudd and Gillard governments has faded.

The end of the productivity surge created by giant mining projects coming on stream is in sight. With the terms of trade in secular decline, keeping the budget in surplus will depend increasingly on the productivity growth induced by the government’s economic reforms.

These are mainly the reforms for which the government was able to win at least an implicit mandate in the 2016 election. The usual opportunity for reform in the government’s first term had been largely forgone as a result of Abbott’s 2013 election promises, including his commitment to run a government of “no surprises".

But will Abbott’s reform program look like enough in 2018? If it is not, will Abbott be politically vulnerable even within his own party? That question might sound far- fetched, but ask yourself this: why is
Malcolm Turnbull
still hanging around?

Abbott is a fighting leader who effectively rewrote the text book on opposition politics. But, as Winston Churchill discovered to his dismay in 1945, the second most politically dangerous thing a fighting leader can do is win.

When the Treasury factors the government’s reform program into its 2018 budget projections, Abbott could have a lot riding on the results.

Of course, no one knows now what lucky breaks Australia and the government will get in the next five years. But there is a high chance the Abbott government will have to make a large proportion of its own economic luck.

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Foundations of public sector reform

That makes the Commission of Audit, the membership and terms of reference of which were unveiled on Tuesday, of critical importance. With its zero-based budgeting approach to government programs, and its commission to examine the underlying strength of the government’s finances, the provision of public infrastructure, and the division of responsibilities between federal government and the states, the audit could lay the foundations for a decade of public sector reform.

There is much to be done. Both sides of politics have ignored and overridden their own rules designed to improve government decision-making and curb the growth of red tape. Major government programs are crying out for structural reform. Medicare, private insurance, the public hospitals and the Pharmaceutical Benefits Scheme are riddled with expensive inefficiency. The same is true of defence spending, in which billions of dollars a year are squandered on supporting inefficient weapons factories and shipyards, primarily for political reasons unrelated to national security. And then there are the billions of dollars spent supporting Australia’s uneconomic car industry – the infant industry that never grew up – and all the Industry Department’s other clients.

And these are just some of the citadels of government waste and inefficiency that have been made invisible by their permanence.

The main concern is whether the audit can do justice to the task in the time it has been set. But if it needs more time it should get it.

A genuinely thorough, zero-based audit of major government programs would give Abbott and the Australian public a huge amount to think about. With the mountain of potential tax reform already identified by the Henry review, and the unfulfilled good intentions of the Council of Australian Governments, Abbott would have the basis of a powerful economic reform program.

But, most important from his point of view, the debate and discussion that will surround the publication of the national audit report should give Abbott a good start in selling renewed reform to the Australian public. It will play to Abbott’s strength because he, more than any other currently practising politician, has the campaigning skill needed to sell a new reform agenda.

He should also have the motivation, because he will be fighting for the medium-term survival of his government and his prime ministership.